When a University President Is a Corporate Officer: Jurisdiction Over Dismissal Cases

The line between an "employee" and a "corporate officer" determines whether a dismissal case goes to the labor tribunals or the regular courts. In Wesleyan University-Philippines v. Maglaya (G.R. No. 212774, January 23, 2017), the Supreme Court settled this question for a university president whose term was cut short, and in doing so clarified important rules on jurisdiction and the finality of judgments.

The Facts of the Case

Guillermo Maglaya was appointed President of Wesleyan University-Philippines (WUP) in May 2005 for a five-year term. In April 2009, the university's new Board of Trustees informed him that his services were terminated. Maglaya filed an illegal dismissal case before the Labor Arbiter.

WUP argued that Maglaya was a corporate officer, not a regular employee, so the case was an intra-corporate controversy that belonged to the Regional Trial Court. The Labor Arbiter agreed and dismissed the case for lack of jurisdiction. But the NLRC reversed, ruling that Maglaya was a mere employee and awarded him over P2.5 million in separation pay, backwages, and damages.

WUP then filed a petition for certiorari with the Court of Appeals. The CA dismissed it, ruling that the NLRC decision had already become final and executory. WUP elevated the case to the Supreme Court.

The Issue: Who Has Jurisdiction?

The central question was whether the NLRC had jurisdiction over Maglaya's illegal dismissal case, or whether it was an intra-corporate controversy that only the regular courts could hear.

The Ruling: A Corporate Officer's Dismissal Is an Intra-Corporate Controversy

The Supreme Court ruled in favor of WUP. A person is a corporate officer when two elements concur: (1) the position is created by the corporation's charter or by-laws, and (2) the officer is elected by the directors or stockholders.

Applying this test, the Court found that WUP's by-laws expressly listed the President as one of the officers of the corporation and made the President an honorary member of the Board. Maglaya was appointed by the Board, not by a managing officer. The fact that the by-laws used the word "appointed" instead of "elected" did not change the nature of his position.

The Court held that the dismissal of a corporate officer is always a corporate act or intra-corporate controversy, and its nature is not altered by the reason or wisdom behind the Board's decision. Under Section 5(c) of PD 902-A, as amended by RA 8799, the Regional Trial Courts exercise exclusive jurisdiction over controversies involving the election or appointment of corporate officers.

The Finality Rule: Certiorari Still Available Within 60 Days

The Court also addressed the CA's ruling on finality. While an NLRC decision becomes final and executory after ten calendar days, the aggrieved party may still file a petition for certiorari under Rule 65 before the CA within 60 days from notice. This remedy remains available even after the decision has become final, particularly on jurisdictional grounds.

The doctrine of immutability of judgment does not apply where the tribunal acted without jurisdiction. A void judgment for want of jurisdiction can never become final and has no legal effect.

Practical Takeaways

• Check the by-laws first. If a position is listed in the corporation's by-laws and the officer is appointed or elected by the board or stockholders, that person is likely a corporate officer, not a mere employee.
• Jurisdiction follows the nature of the controversy. Dismissal cases involving corporate officers belong to the regular courts as intra-corporate controversies, not the NLRC.
• Finality is not absolute. Even if an NLRC decision has become final, a party may still question it via certiorari on jurisdictional grounds within the 60-day period.
• Void judgments have no effect. A decision rendered without jurisdiction is void and cannot be the source of rights or obligations.
• The "control test" is not decisive for corporate officers. The manner of appointment, duties, and compensation do not override the clear language of the by-laws.

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.